The latest news involving the IRS Oversight Board

(Washington, DC) The IRS Oversight Board held its ninth Public Forum on February 3rd, inviting expert panelists to share their views on issues critical to our nation’s tax administration system. The topics explored were:

Hiring, on-boarding, and enculturation of a high performance workforceThe IRS has had an influx of new hires over the past year, creating both challenges and opportunities for the IRS. Representatives from government, union, private sector, and non-profit organizations discussed successful recruitment and hiring methods, as well as the enculturation process to assimilate new employees into the workforce in a mutually beneficial way.

Enhanced approaches to dealing with the tax gap attributable to small businessThe IRS National Research Program determined that a large share of the tax gap is attributable to small businesses. Representatives from state government, professional tax preparers, small business and venture capitalists discussed realistic approaches to encouraging tax compliance and using and analyzing data in innovative ways to further tax law enforcement.

Corporate board governance of tax riskLast fall, IRS Commissioner Douglas Shulman made a speech suggesting that the IRS wants to “engage corporate boards about their roles and responsibilities in conducting appropriate assessment and oversight of tax risk.” The Board explored with corporate leaders familiar with board of director operations steps that could be taken by corporate boards and tax administrators that would lead to mutual benefits for both.

Board Also Meets with National Taxpayer Advocate, Discusses CADE, Long-Term Measures and Contracting

At its February 4th business meeting, the Board met with the National Taxpayer Advocate Nina Olson to discuss her 2009 Annual Report to Congress. The Board asked to be briefed on the most serious problems associated with filing of notices of tax liens and the examination process. Olson’s report said that the IRS’ lien filing policies fail to promote future tax compliance and unnecessarily harm taxpayers. The discussion helped to illuminate how various IRS actions involving federal tax liens are treated in the reports issued by the major credit reporting agencies in the private sector.

In a report of the Board’s Operations Committee, it was noted by committee chair Bob Tobias that the IRS Appeals division had implemented some creative approaches in its efforts to enculturate its newly hired employees and also to make use of the experiences they bring to the IRS. Its efforts were noteworthy in light of the panel discussions during the public meeting to explore cross-enculturation issues.

The Board also was updated on the Customer Account Data Engine 2 and related Business Systems Modernization efforts. The IRS reported solid progress in defining the requirements for the CADE 2 program and otherwise moving ahead on the effort. The IRS reported it has exited milestones 0-2 of the Enterprise Life Cycle process that is crucial to successful information technology modernization projects. The IRS also reported it is on track, subject to the availability of adequate funding, to exit milestones 3, 4A, 4B, and 5 in order to achieve Transition State 1 in January 2012, which would enable the daily updating of taxpayer account records. The Board was pleased to hear about the progress on CADE 2, including the extent to which key staff from the IRS business operating divisions are actively engaged in the effort, and will continue to monitor CADE 2 progress at every Board meeting until Transition State 1 is achieved.

The IRS and the Board also discussed the long term measures used to gauge IRS success in achieving the key goals articulated in the IRS Strategic Plan. Most of the open issues remaining from previous work in the area were resolved during the meeting, including agreement on the methodology for constructing measures to assess taxpayer experiences with IRS service and enforcement programs, the level of IRS employee engagement compared to staff at other larger federal agencies, and progress on IRS information technology modernization efforts. Data on the IRS long term measures and other performance measures are available on the Board’s website (www.irsoversightboard.treas.gov) and will be updated further as additional information becomes available.

In addition, the Board received a briefing about IRS contracting approaches and the efforts taken to improve IRS efficiency and risk management associated with contracting, and about IRS efforts to implement the IRS initiative to expand its regulation of paid return preparers.

The next Board meeting will be held in Washington, DC on April 29, 2010.